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the stock. Mr. Strong did disclose to Mr. Haymond that he had
included the commission in the basis. Mr. Haymond's questions
regarding the commission concerned whether petitioners owed tax
on the commission itself since he had not received it.
Mr. Haymond did not object to Mr. Strong's method of
reporting the stock transaction, and the returns were filed as
prepared by Mr. Strong. Mr. Haymond did not show InTex's tax
return to Mrs. Haymond. He presented their personal tax return
to Mrs. Haymond and indicated where to sign. Mrs. Haymond did
not discuss either InTex's return or petitioners' personal return
with Mr. Strong. Mrs. Haymond signed the return, relying on Mr.
Haymond's expertise for its correctness.
For the taxable year 1990, petitioners and InTex reported
their respective incomes on the cash basis method of accounting.
InTex reported the sale of the stock on its tax return. Schedule
D of InTex's return reflected the stock sales price of
$1,299,993; a basis of $869,3142, which included the $330,000
commission payable to petitioner; and a resulting capital gain of
$430,679. Petitioners, in turn, reported 100 percent of the
2 The parties have stipulated this amount was $867,314;
however, the return shows $869,314. (Also, sales price
($1,299,993) less the gain reported ($430,679) equals $869,314.)
This discrepancy does not affect the amount in dispute (the
$330,000 commission).
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